The laundering of tax-evaded money or the proceeds of
criminal activities, mainly drugs, is effected through regular
banking channels. The money changes ownership a few times to obscure
its trail and the identities of the true owners.
Many offshore banks manage shady investment ploys. They maintain two
sets of books. The "public" or "cooked" set is made available to the
authorities - the tax administration, bank supervision, deposit
insurance, law enforcement agencies, and securities and exchange
commission. The true record is kept in the second, inaccessible, set
of files.
This second set of accounts reflects reality: who deposited how
much, when and subject to which conditions - and who borrowed what,
when and subject to what terms. These arrangements are so stealthy
and convoluted that sometimes even the shareholders of the bank lose
track of its activities and misapprehend its real situation.
Unscrupulous management and staff sometimes take advantage of the
situation. Embezzlement, abuse of authority, mysterious trades,
misuse of funds are more widespread than acknowledged.
The thunderous disintegration of the Bank for Credit and Commerce
International (BCCI) in London in 1991 revealed that, for the better
part of a decade, the executives and employees of this penumbral
institution were busy stealing and misappropriating $10 billion.
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